Potbelly (NASDAQ:PBPB) and Famous Dave’s of America (NASDAQ:DAVE) are both small-cap retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, analyst recommendations and earnings.

Profitability

This table compares Potbelly and Famous Dave’s of America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Potbelly -2.10% 6.81% 4.52%
Famous Dave’s of America 8.86% 26.14% 13.41%

Analyst Recommendations

This is a breakdown of current ratings for Potbelly and Famous Dave’s of America, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Potbelly 1 0 1 0 2.00
Famous Dave’s of America 0 0 1 0 3.00

Potbelly currently has a consensus target price of $10.00, suggesting a potential upside of 11.11%. Famous Dave’s of America has a consensus target price of $9.00, suggesting a potential upside of 63.64%. Given Famous Dave’s of America’s stronger consensus rating and higher probable upside, analysts clearly believe Famous Dave’s of America is more favorable than Potbelly.

Insider & Institutional Ownership

72.9% of Potbelly shares are owned by institutional investors. Comparatively, 51.9% of Famous Dave’s of America shares are owned by institutional investors. 6.0% of Potbelly shares are owned by insiders. Comparatively, 43.0% of Famous Dave’s of America shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Volatility and Risk

Potbelly has a beta of 1.03, meaning that its stock price is 3% more volatile than the S&P 500. Comparatively, Famous Dave’s of America has a beta of 0.82, meaning that its stock price is 18% less volatile than the S&P 500.

Earnings and Valuation

This table compares Potbelly and Famous Dave’s of America’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Potbelly $422.64 million 0.51 -$8.88 million $0.29 31.03
Famous Dave’s of America $54.89 million 0.93 $4.86 million N/A N/A

Famous Dave’s of America has lower revenue, but higher earnings than Potbelly.

Summary

Famous Dave’s of America beats Potbelly on 8 of the 12 factors compared between the two stocks.

About Potbelly

Potbelly Corporation, through its subsidiaries, owns, operates, and franchises Potbelly Sandwich Works sandwich shops in the United States. The company offers toasty warm sandwiches, salads, soups, chili, sides, desserts, breakfast sandwiches, and steel cut oatmeal. As of February 25, 2019, the company operated approximately 400 shops in the United States; and approximately 50 franchisees operated shops in the United States, the Middle East, Canada, and India. The company was formerly known as Potbelly Sandwich Works, Inc. and changed its name to Potbelly Corporation in 2002. Potbelly Corporation was founded in 1977 and is headquartered in Chicago, Illinois.

About Famous Dave’s of America

Famous Dave's of America, Inc. develops, owns, operates, and franchises barbeque restaurants under the Famous Dave's name. It offers smoked, barbequed, and grilled meats, as well as entrée items and delicious side dishes that are prepared using prepared proprietary seasonings, sauces, and mixes. The company operates full-service and counter-service restaurants. As of March 4, 2019, it owned 17 locations and franchised 124 restaurants in 33 states, the Commonwealth of Puerto Rico, Canada, and the United Arab Emirates. Famous Dave's of America, Inc. was founded in 1994 and is headquartered in Minnetonka, Minnesota.

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